Co-operation Works During Covid Crisis
08 April 2021
Group financial highlights
Revenue was £11.5bn (2019: £10.9bn) with Food growth of 3.5% and Funeralcare revenue flat year-on-year
Reported profit after tax and discontinued items was £77m (2019: £33m)
o Profit after tax and discontinued items (excluding change in accounting policy for funeral plans) of £49m (2019: £69m)
Reported profit after tax from continuing operations of £72m (2019: £49m), and is net of a £55m tax charge
o Profit after tax from continuing operations (excluding change in accounting policy for funeral plans) of £44m (2019: £85m)
Reported profit before tax was £127m (2019: £24m)
o Excluding change in accounting policy for funeral plans, profit before tax was £92m (2019: £67m)
Net debt (see note 1) of £550m (2019: £695m)
Capex of £313m (2019: £407m), reflecting reduced investment in the business, due to the pandemic
Additional Covid costs during the year of £84m (2), including additional new colleagues, increased colleague absence linked to the virus, a colleague “Thank You” reward and the purchasing of personal protective equipment
(Note 1) Excluding the IFRS 16 lease liability
(2) Support from the Government’s emergency economic measures amounted to £82m
All our Co-op colleagues, including temporary recruits, played an extraordinary role in caring for and feeding the nation during the crisis, enabling over 3,400 of the Co-op’s community-based Food stores and funeral homes to remain open and a further 5,000 independent food stores to be supplied through the pandemic. Underpinning all of that, the business continued to drive its Community and Colleague support when it was needed most.
Significant increase in Co-op Community & Campaigning Support
Over £12m of funds given to charities and community causes, a further £15m shared with 4,500 local causes from our Local Community Fund
FareShare had been able to distribute five million meals through our support
£3.1m in Co-op food vouchers and technology equipment provided to 6,000 pupils at our academies
Co-operate online volunteering and community platform launched, and 1,000 Co-op Member Pioneers provide dedicated support for the vulnerable during lockdown
- A key member of the Stop Child Food Poverty Taskforce, supporting Marcus Rashford in his successful campaign to extend free school meals
Support of colleagues across the business
£25m given to colleagues in recognition of their hard work and commitment
Commitment to improving our hourly pay rates to align with the Real Living Wage in 2021, boosting pay for 33,000 colleagues with an investment of £53m per annum
Commitments to tackle racial inequalities published and new Equality and Inclusion Think Tank mobilised
Our efforts to ensure colleague safety accelerated through our ‘Safer Colleagues, Safer Communities’ programme
Another good year for Food business - Food sales of £7.8 billion up 3.5% on 2019, like-for-like sales up 6.9%
Wholesale business achieved sales of £1.6 billion compared to £1.4 billion in 2019; a further 624 new independent stores signed up by Nisa
During the pandemic, 56 new Co-op stores were opened, a further 105 were refitted and 13 more were extended
Our online offer expanded significantly during the year, with 800 Co-op Food stores now providing food to homes via our delivery partners
Increase in the number of funerals arranged, with over 10,000 more funerals than 2019 - an increase of 11.4%, sadly reflecting the excess deaths caused by Covid-19
Government restrictions meant that only the most basic of arrangements were possible. As a result, and despite the increase in funerals conducted, revenue was flat year on year at £272m
Marked reduction in funeral plan sales as colleagues focused on providing greater at need care
As we right-sized the branch estate for the future we made the difficult decision to close 164 funeral homes
Insurance and legal services
Sales were much reduced during the spring and early summer, particularly for motor and travel insurance policies, as lockdown restrictions impacted trading across the sector
Legal Services saw case volumes grow by 9% in 2020. The number of probate cases we took on also grew, though external factors impacted our overall performance
Successful completion of the sale of our insurance underwriting business took place at the end of 2020. The sale enables us to unlock the potential of Co-op Insurance under a new operating model which will provide lower prices and more bespoke products
- In November we re-launched Co-op Power, our business to business clean energy buying group, with plans to significantly grow its membership in the years ahead. Recent corporate clients include Nationwide Building Society, Roadchef and the RNLI
Our Health venture grew significantly during 2020 and responded brilliantly to the challenges presented by Covid, growing to become the 6th largest dispensary business by the end of the year
However, it became clear that the business would require significant additional capital to move it forwards. As such the decision was taken to sell it to Phoenix UK Group, a leading Healthcare provider, a move which was announced in March this year
Looking ahead, we see significant uncertainty and must continue to exercise financial prudence. The market remains highly competitive and, against the backdrop of a worsening consumer economy, the Co-op is planning for and dealing with continued lockdowns. We continue to rebuild the Co-op’s balance sheet to secure the long-term future of the group.
We are working to respond to the changing needs of our customers, reflected in hyper-localism, further moves towards digitisation in all our businesses and providing value for money across the business.
As a co-operative, our approach and purpose will remain the same: championing a better way of doing business for our customers and members and their communities by offering a range of products and services which create value in its broadest sense.
Steve Murrells, Chief Executive of the Co-op, said:
“In 2020 we lived through a perfect storm, with every part of our lives turned upside down – socially and economically, mentally and physically. Along the way we discovered much about our society, some of it brilliant and inspiring, and some of it quite ugly thanks to the unfairness and inequality Covid-19 has revealed and exacerbated.
“During the last few years, we’ve created a business that is truly focused on delivering clear value and benefits for our members, customers and their communities. All that work proved to be essential in giving us the ability to respond to the immediate and sustained demands which the pandemic brought with it. Our Vision, Co-operating for a Fairer World, was our guiding light throughout, and our response to Covid-19 demonstrated the power of co-operative enterprise and the relevance of co-operative values.”
Allan Leighton, Independent Non-Executive Chair of the Co-op, said:
“Covid-19 presented us with a national emergency and a unique set of business challenges and community needs which showed that co-operation was capable of making a difference during an extraordinary time in the nation’s history. I am proud of how we rose to the challenge of the pandemic through our business operations and through our support to local communities. Creating Co-op value for our members has always been at the heart of our endeavours and I believe that reached new heights during 2020.
“On behalf of the Board, I want to acknowledge the incredible commitment shown by Co-op colleagues across all parts and at all levels of the business throughout 2020. It was an outstanding achievement, which epitomised our Co-op way of doing business, throughout a year that none of us will forget.”
For more information, please contact Tom Cooledge (07773 097060, firstname.lastname@example.org); Fay Rajaratnam (07810 329390, email@example.com); Russ Brady (07880 784442, firstname.lastname@example.org); Susanna Voyle (079 8089 4557, email@example.com)
About the Co-op:
The Co-op is one of the world’s largest consumer co-operatives with interests across food, funerals, insurance, legal services and health. Owned by millions of UK consumers, the Co-op operates 2,600 food stores, over 800 funeral homes and provides products to over 5,100 other stores, including those run by independent co-operative societies and through its wholesale business, Nisa Retail Limited.
Employing over 63,000 people, the Co-op has an annual turnover of over £11.5 billion. As well as having clear financial and operational objectives, the Co-op is a recognised leader for its social goals and community-led programmes. The Co-op exists to meet members’ needs and stand up for the things they believe in.